IFRS Restatement

Mears Group PLC
21 March 2006


Unaudited presentation of Financial Statements prepared under IFRS

Mears Group PLC has voluntarily elected to adopt International Financial
Reporting Standards (IFRS) for the year ended 31 December 2005. The date of
transition to IFRS is therefore 1 January 2004 with the transitional year being
the year to 31 December 2004.

The preliminary results for the year ended 31 December 2005 were released on 21
March 2006.

The purpose of this announcement is to explain how Mears Group PLC's financial
performance for the year ended 31 December 2004, and its financial position as
at that date, presented under IFRS, differs to that previously reported under UK
Generally Accepted Accounting Principles (UK GAAP).

The financial information contained in this announcement is unaudited. This does
not constitute statutory accounts as defined by section 240 of Companies Act
1985. A copy of the statutory accounts for the year ended 31 December 2004,
which were prepared under UK GAAP, has been delivered to the Registrar of
Companies.

The adoption of IFRS does not affect the underlying performance of the business
and turnover remains unchanged. The adoption also has no impact on cash
generated from operations. The reconciliations and explanatory notes describe
the impact of the adoption of IFRS on the results of the Group for the year
ended 31 December 2004, six months ended 30 June 2004 and six months to 30 June
2005

Profit and loss reported under UK GAAP for the year ending 31 December 2004 is
reconciled to IFRS as follows:

                    UK GAAP        Goodwill Share-based  Deferred tax     IFRS
                               amortisation    payments
                      £'000                                              £'000
----------------    -------        --------     -------     --------   --------
Sales revenue       173,685             -           -             -    173,685

Cost of sales      (128,766)            -           -             -   (128,766)
----------------    -------        --------     -------     --------   --------
Gross profit         44,919             -           -             -     44,919

Administrative
expenses            (38,081)          664        (315)            -    (37,732)
----------------    -------      --------     -------      --------   --------
Operating
result                6,838           664        (315)            -      7,187

Share of
operating
result in
associate                 4             -           -             -          4

Finance costs           (68)            -           -             -        (68)
----------------    -------      --------     -------      --------   --------
Result for the
year before tax       6,774           664        (315)            -      7,123

Tax expense          (1,855)            -           -            95     (1,760)
----------------    -------      --------     -------      --------   --------
Net result for
the year              4,919           664        (315)           95      5,363
----------------    -------      --------     -------      --------   --------


Profit and loss reported under UK GAAP for the 6 months to 30 June 2004 is
reconciled to IFRS as follows:

                   UK GAAP       Goodwill Share-based   Deferred tax     IFRS
                             amortisation    payments
                     £'000                                             £'000
-----------------   -------      --------     -------      --------  --------
Sales revenue       81,331             -           -             -     81,331
Cost of sales      (61,082)            -           -             -    (61,082)
-----------------    -------      --------    -------      --------  --------
Gross profit        20,249             -           -             -     20,249
Administrative
expenses           (17,345)          344        (130)            -    (17,131)
-----------------    -------      --------     -------      --------  --------
Operating
result               2,904           344        (130)            -      3,118
Share of
operating
result in
associate                3             -           -             -          3
Finance costs          (32)            -           -             -        (32)
-----------------    -------      --------     -------      --------  --------
Result for the
year before
tax                  2,875           344        (130)            -      3,089
Tax expense           (911)            -           -            45       (866)
-----------------    -------      --------     -------      --------  --------
Net result for
the year             1,964           344        (130)           45      2,223
-----------------    -------      --------     -------      --------  --------


Profit and loss reported under UK GAAP for the 6 months to 30 June 2005
reconciled to IFRS as follows:

                    UK GAAP     Goodwill   Share-based   Deferred tax    IFRS
                              amortisation    payments
                      £'000                                             £'000
-------------------   -------      --------     -------      --------  --------
Sales revenue        96,295             -           -             -     96,295
Cost of sales       (68,710)            -           -             -    (68,710)
-------------------    -------      --------     -------      --------  --------
Gross profit         27,585             -           -             -     27,585
Administrative
expenses            (23,312)          283        (235)            -   (23,264)
-------------------    -------      --------     -------      --------  --------
Operating
result                4,273           283        (235)            -     4,321
Share of operating        -             -           -             -         -
result in associate
Finance costs             6             -           -             -         6
-------------------    -------      --------     -------      --------  --------
Result for the
year before
tax                   4,279           283        (235)            -     4,327
Tax expense          (1,278)            -           -            55    (1,223)
-------------------    -------      --------     -------      --------  --------
Net result for
the year              3,001           283        (235)           55     3,104
-------------------    -------      --------     -------      --------  --------


Earnings per share reported under IFRS for the year ended 31 December 2004 and
six months to 30 June 2004 and 30 June 2005 are as follows:
      
                        -------Basic------              ------Diluted------
      
                    6 months   6 months    Year   6 months    6 months     Year
                        2005       2004    2004       2005        2004     2004
                           p          p       p          p           p        p
---------------      -------    -------  ------    -------      ------   ------
Earnings per share      5.35       3.87    9.32       4.95        3.63     8.71

Effect of eliminating
share based payments    0.31       0.15    0.38       0.29        0.14     0.36

Effect of full
tax adjustment         (0.15)     (0.10)  (0.66)     (0.14)      (0.09)   (0.62)
---------------      -------    -------  ------    -------      ------   ------
Normalised earnings 
per share before
share based payments    5.51       3.92    9.04       5.10        3.68     8.45
---------------      -------    -------  ------    -------      ------   ------

The remeasurement of the consolidated balance sheet items at the IFRS opening
balance sheet date and at 31 December 2004, together with the reconciliation of
the Group's equity reported under UK GAAP to its equity under IFRS as at 1
January 2004 and 31 December 2004 may be summarised as follows:



The Group                        Note      UK GAAP      Effect of         IFRS
                                                       transition
                                             £'000          £'000        £'000
---------------                -------      -------        -------      -------
At 1 January 2004
Pension obligation                1.2            -            (88)         (88)
Proposed dividend creditor        1.3         (573)           573            -
Deferred tax asset                1.4            -            900          900
---------------                -------      -------        -------      -------
Total adjustment to equity                                  1,385
Total equity - UK GAAP                                     12,292
---------------                 -------      -------       -------      -------
Total equity - IFRS                                        13,677
---------------                 -------      -------       -------      -------
At 31 December 2004
Goodwill                          1.1       10,406            663       11,069
Equity accounted investments      1.1           48              1           49
Pension obligation                1.2            -           (142)        (142)
Proposed dividend creditor        1.3         (815)           815            -
Deferred tax asset                1.4            -          2,100        2,100
---------------                 -------      -------       -------      -------
Total adjustment to equity                                  3,437
Total equity - UK GAAP                                     16,436
---------------                 -------      -------       -------      -------
Total equity - IFRS                                        19,873
---------------                 -------      -------       -------      -------


1.1 Goodwill

Under IFRS, goodwill is not amortised. Instead, goodwill is tested for
impairment annually, or more frequently if events or changes in circumstances
indicate that it might be impaired.

As required by IFRS 1, 'First-time adoption of IFRS', goodwill recognised under
UK GAAP has been tested for impairment at the transition date of 1 January 2004.
No impairment loss was required to be recognised. In accordance with IFRS 1,
this amount has been considered the carrying amount of goodwill in the opening
IFRS balance sheet.

For the year ending 31 December 2004, goodwill is not amortised under IFRS. As a
result, the amortisation of goodwill as required under UK GAAP is reversed in
the reconciliation from UK GAAP to IFRS with a corresponding reduction in
expenses.


1.2 Pension obligation

Under IFRS, pension obligations are recognised as a liability in the balance
sheet based on the defined benefit obligation at the balance sheet date. In
accordance with the transitional provisions of IFRS 1 the deficit has been
recognised in the balance sheet at the transition date of 1 January 2004. Under
UK GAAP the pension costs charged against profits were designed to spread the
anticipated pension costs over the service lives of employees in the scheme.


1.3 Proposed dividend creditor

Under IAS 10 'Events after the balance sheet date', dividends approved after the
balance sheet date should not be recognised as a liability at the balance sheet
date since the liability did not represent a present obligation at that date.
Under UK GAAP, proposed dividends were recognised as a liability in the period
to which they related.


1.4 Deferred tax asset

Under IAS 12 'Income Taxes', deferred tax is provided on temporary differences
between the book carrying value and tax base of assets and liabilities (a
balance sheet approach). Under UK GAAP, deferred tax was provided on timing
differences between the accounting and taxable profit (an income statement
approach).


1.5 Share-based payments

Under IFRS 2 'Share-based payments', the cost of employee share schemes,
including SAYE schemes, is based on the fair value of the awards. Under UK GAAP,
the cost of awards made under the Group's employee share schemes was based on
the intrinsic value of the awards, with the exception of SAYE schemes for which
no cost was recognised.






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